Emissions trading to include airlines

The European Commission is set to enforce emissions limits for all airlines flying in and out of the European Union next January, to the chagrin of non-EU countries, which are demanding exemptions from what they say is unfair taxation.

The U.S. State Department formally asked for an exemption at a meeting in Oslo at the end of June, saying it was "the wrong way to pursue the right objective," and Russia and China have also protested the plan. All three argue the EU has no jurisdiction over foreign companies outside of its borders.

The Air Transport Association, a group representing the majority of U.S. commercial airlines, has submitted a legal complaint to the European Court of Justice in Luxembourg.

Within Europe, airline companies are more accepting of the plan, which has been in the works for several years, though there are concerns the program is too complicated and that it will not sufficiently motivate research into better, greener technologies.

"Overall, as a responsible airline, we welcome the objectives of the program and certainly agree that in the long term it will force every industry participating in it to search for and invest in more green technology," said Balazs Varro, corporate communications manager of the Hungarian airline Wizz Air.

However, industry members say the regulation discriminates against airline companies because competing transport modes are not subject to carbon caps, and there is no way to guarantee that profits from credits bought by airlines are used for research in emissions-cutting technologies.

"The devil will obviously be in the details," Varro said. "One thing is for sure, the system will need to be able to positively discriminate for fast growing, more efficient and more green airlines. ... We'll see whether the current scheme will be able to do that."

Under the Emissions Trading Scheme (ETS), a certain amount of carbon credits are given for free to industries that emit carbon dioxide, and when a company goes over its allotted amount of credits, it must buy more credits, either from the governments of EU member states or from other companies with leftover credits.

For airlines, 85 percent of the credits will be free, and the remaining 15 percent must be purchased by companies, said Isaac Valero-Ladron, a spokesman for the European Climate Commission. Those amounts will be based on a "benchmarking process," set to be published in September, that uses each operator's 2010 activities, including how much they carried and the total distance they traveled.

"The whole purpose of the inclusion [of airlines in the regulation] is to reduce emissions 46 percent compared with business at usual levels," he said. "The aviation sector is a fast-developing sector, and its emissions count for around 3 percent of global carbon dioxide emissions, so it would be very irresponsible not to do something."

Considering that rapid growth, Simon McNamara, deputy director general of the European Regions Airline Association, said allotted credit amounts will leave most companies paying for the majority of their credits.

Czech Airlines (ČSA) said it is "too early" for questions about the effect of the limits as the company is not yet certain how many emission credits it will be allotted.

"ČSA has met all requirements regarding the issue and got approval for the procedures of emissions monitoring and reporting," said ČSA spokeswoman Hana Hejsková.

Travelservice, the largest Czech-owned private carrier, declined to comment.

European airline companies were well aware of the plan for several years, so the cost of credits will not come as a shock, industry members said, though there will be a perceivable impact.

"They can try to recover the cost, which means the price of tickets will increase, and that has an impact on demand and could make some routes less profitable," McNamara said. "Or, it could impact profitability if they try to absorb the costs."

Governments should use the profits from selling credits to invest in low-emission aviation technology, Valero-Ladron said, which in the long run would make the costs well worth it. EU member states, however, have thus far refused to be held to that commitment.

"One thing that is quite frustrating for our industry is that the various governments across Europe are auctioning off emissions permits, ... and not one has committed the money they will receive to research and development in new technology," McNamara said. "Regrettably, governments are simply swallowing that money."

Valero-Ladron said the only way they will provide any exemptions from the regulation is if a state has equivalent measures to curb emissions, and that each exemption request will be analyzed to make sure it has comparable effect.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com